SMEs using Health Care Spending Accounts creatively

Health Care Spending Accounts aren’t new products, and the scope of expenses covered hasn’t changed much since they came to market about a decade ago. What is changing is how small businesses are using these products.

Health Care Spending Accounts have traditionally been used to enhance a benefit plan, with all employees getting a pre-determined amount of cash to use to cover any CRA approved medical expense that isn’t covered by the core plan or provincial plan. Now, more small business owners are recognising healthcare spending accounts as a means to be more cost-savvy and creative with their benefits offerings.

Robert Crowder, president of The Benefits Trust, says cost is king for small business owners and having the ability to offer employees benefits but still control the costs is something clients are looking for. “We used to get calls monthly about Health Care Spending Accounts,” he says. “Now we get calls daily.”

Lucy van Scheltinga, a benefits consultant with Benecaid Health Benefits Solutions, says she too is seeing an uptick in Health Care Spending Accounts, and more integration between them and traditional benefit plans. She says it’s common to add a healthcare spending account to a traditional plan when a co-pay has been added. “Health Care Spending Accounts can plug holes in traditional plans. They are being used as part of cost-saving strategies,” she says.

And this trend seems to be common across the country. Only three years ago, Health Care Spending Accounts were the norm in the western provinces says Glenn Kehrer, employee benefit consultant with Group Benefits Consulting of Canada Inc. But now with the tighter economy Kehrer is seeing them being used strategically. “We are seeing them pop up when employers are making cutbacks to other programs, it’s a way to soften the blow,” he says. “[It’s] a good way of adding benefit without adding too much to the bottom line.”

It’s also a tax-deductible benefit for employers that employees can reap the full rewards from, Kehrer points out. “Governments make a lot of money off of pay raises, so a healthcare spending account is one way of adding a benefit without adding a huge costs and it’s one that goes right to the employee.”